WASHINGTON — Competitive bidding isn't the only thing providers have to contend with as of January. On Nov. 2, CMS released its Medicare physician fee schedule final rule for 2011. Among other provisions, the new rule finalizes elimination of the first-month purchase option for power wheelchairs and authorizes the implementation of a national mail order bid for diabetes supplies.
The rules take effect Jan. 1, 2011.
You can download a PDF of the final rule (CMS-1503-FC), entitled "Medicare Program; Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2011." But get ready to read: It's 2,023 pages long.
CMS issued the Medicare physician fee schedule proposed rule in late June, and the final rule's provisions impacting DME are largely the same as the agency proposed, according to Cara Bachenheimer, senior vice president of government relations for Invacare. The only exception, she noted, is that CMS did not finalize its oxygen policy proposal from the draft rule, which would have addressed beneficiaries who relocate outside the provider's service area in months 18-36.
The rule does:
- Adjust the 2011 DMEPOS fee schedule;
- Eliminate the first-month purchase option for standard power wheelchairs (not effective in Round 1 competitive bid areas); and
- Address a number of issues related to competitive bidding,
including:
- the addition of 21 areas to Round 2;
- the subdivision of large metropolitan areas;
- a national mail order bid program for diabetic supplies;
- continuing consideration of grandfathering rules for oxygen and capped rental equipment;
- an appeals process for contract suppliers terminated from the bid program; and
- addition of "off-the-shelf" orthotics to a bid program exemption if furnished by a physician.
The rule is expected to be published in the Nov. 29 Federal Register, and the comment period closes Jan. 3.
Courtesy of Bachenheimer, following is a synopsis of the final rule's provisions affecting DME and oxygen:
Productivity Adjustment
The CMS rule addresses the "productivity adjustment" that impacts the annual update to the DME fee schedules. Section 3401 of The Affordable Care Act incorporates a productivity adjustment into the update factors for certain payment systems, including DMEPOS, starting in calendar year 2011. CMS has determined that the productivity adjustment for CY 2011 1.2%. CMS estimates that this will achieve $60 million in savings under the DMEPOS benefit in 2011. The CPI update for 2011 is 1.1%; therefore, DMEPOS fee schedules will be reduced by .1 percent as of January 1, 2011.
No Change to Rules for Oxygen and Oxygen Equipment
CMS had proposed to revise the rules for oxygen and oxygen equipment to address situations where beneficiaries relocate outside the service area of a supplier during the 36-month rental payment cap period for the oxygen equipment. CMS explained that Medicare "beneficiaries are experiencing great difficulties in finding suppliers willing to furnish oxygen equipment in situations where only a few months are left in the 36-month rental payment period at the time they relocate." As a result, CMS had proposed to revise the regulation to require the supplier that furnishes the oxygen equipment and receives payment for month 18 or later to either furnish the equipment for the remainder of the 36-month rental payment period or, in the case where the beneficiary has relocated outside the service area of the supplier, make arrangements for furnishing the oxygen equipment with another supplier for the remainder of the 36-month rental payment period.
Based on comments received and other information, CMS states that it is not finalizing this proposal at this time. CMS does say, however, that "If in the future, beneficiaries' access to oxygen equipment becomes a problem following the relocation of beneficiaries, we may consider this proposal or similar proposals."
Elimination of First Month Purchase Option for Standard Power Wheelchairs
CMS is implementing the provision in the new health care law (Patient Protection and Affordable Care Act, PPACA) that eliminates the first month purchase option for standard power wheelchairs. The provision applies to Group 1 power wheelchairs, and most Group 2 power wheelchairs. It does not apply to "complex rehabilitative power wheelchairs" which CMS defines as power wheelchairs that are classified as: (1) Group 2 power wheelchairs with power options that can accommodate rehabilitative features (for example, tilt-in-space), or (2) Group 3 power wheelchairs."
Payment for standard power wheelchairs will be 15% of purchase price in months one through three, and 6% of purchase price in months four through 13. This will apply to Group 2 power wheelchairs furnished on or after January 1, 2011.
This provision does not apply to standard power wheelchairs that are provided under Round 1 of the competitive bidding program scheduled to start January 1, 2011. In these nine bid areas, the contract suppliers furnishing power wheelchairs pursuant to contracts entered into prior to January 1, 2011 will continue to be paid based under the current regulations using 10 percent of the purchase price for months 1 through 3 and 7.5 percent for each of the remaining months.
Competitive Bid Program Provisions
1. 21 Additional Bid Areas - CMS is finalizing its decision to add the following 21 metropolitan areas to be included in Round 2 of the bid program — these are the same as CMS proposed this summer. Round 2 is scheduled to be implemented January 2013 with bidding to begin in the spring of 2011. CMS announced the initial 70 areas to be included in Round 2 in January 2008:
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
Washington-Arlington-Alexandria, DC-VA-MD-WV
Boston-Cambridge-Quincy, MA-NH
Phoenix-Mesa-Scottsdale, AZ
Seattle-Tacoma-Bellevue, WA
St. Louis, MO-IL
Baltimore-Towson, MD
Portland-Vancouver-Beaverton, OR-WA
Providence-New Bedford-Fall River, RI-MA
Buffalo-Niagara Falls, NY
Rochester, NY
Tucson, AZ
Honolulu, HI
Albany-Schenectady-Troy, NY
Worcester, MA
Oxnard-Thousand Oaks-Ventura, CA
Springfield, MA
Bradenton-Sarasota-Venice, FL
Poughkeepsie-Newburgh-Middletown, NY
Stockton, CA
Boise City-Nampa, ID
2. Subdivision of Large MSAs - CMS finalized its decision to subdivide the Chicago, Los Angeles and New York metropolitan areas into smaller bid areas. The Chicago area is being divided into four separate bid areas; the Los Angeles area into two separate bid areas, and the New York area into six separate bid areas. The Chicago bid area will be finalized as proposed. The Los Angeles area will be finalized as proposed with Los Angeles County and Orange County being the two bid areas, with the exception that it will not include Santa Catalina Island and San Clemente Island.
Following are the four Chicago bid areas:
Indiana-Chicago Metro CBA — includes Lake, Jasper, Newton
and Porter, IL
South-West Chicago Metro CBA — includes Will, Grundy,
Kendall, DeKalb and Krone, IL
Central Chicago Metro CBA — includes Cook and DuPage,
IL
Northern Chicago Metro CBA — includes Lake and McHenrie, IL
and Kenosha, WI
The New York bid area will be finalized as proposed with three changes: it will exclude Pike County from the North-West NY Metro CBA; it is splitting the North-West NY Metro CBA into two new CBAs - a CBA containing the New Jersey counties from the proposed North-West NY Metro CBA, and a smaller CBA containing the New York counties from the proposed North-West NY Metro CBA. Further, CMS is removing Richmond County, NY from the proposed South New York Metro, leaving this CBA to be comprised of six counties in New Jersey. CMS is, therefore, moving Richmond County, NY to the Nassau-Brooklyn-Queens-County Metro CBA and has changed the name of the CBA to Nassau-Brooklyn-Queens- Richmond County Metro CBA.
Following are the six New York bid areas:
Nassau-Brooklyn-Queens-Richmond County Metro CBA —
includes Nassau, Kings, Queens and Richmond, NY
Suffolk County CBA — includes Suffolk, NY
Bronx-Manhattan CBA - includes Bronx and Manhattan, NY
Northern NJ Metro Area CBA — includes Hudson, Bergen,
Passaic, Essex, Morris and Sussex, NJ
North East NY CBA Metro — includes Putnam, Rockland and
Westchester, NY
Southern NY Metro CBA — includes Hunterdon, Union, Middlesex,
Monmouth, Ocean, and Somerset, NJ.
3. National Competitive Bid Program for Mail Order Diabetic Supplies (42 C.F.R § 414.402) - CMS finalized its proposal for a national bid program for mail order diabetic supplies largely as proposed. CMS will establish a national mail order competitive bid program that will take place after 2010 to award contracts to suppliers to furnish replacement diabetic testing supplies across the nation. CMS re-states that currently based on claims data from fiscal year 2009 over 62 percent of beneficiaries receive their replacement diabetic testing supplies from mail order suppliers.
CMS is finalizing the rules related to a national mail order bid:
(1) A new definition for what constitutes mail order - which includes anything other than when beneficiary/caregiver picks up at local retail pharmacy. CMS is defining mail order as items shipped or delivered to the beneficiary's home, regardless of the method of delivery, and non-mail order is defined as items that a beneficiary or caregiver picks up in person at a local pharmacy or storefront. "National mail order DMEPOS" competitive bid program is defined as a program where contracts are awarded to suppliers for the furnishing of mail order items across the nation. Beneficiaries will still have choice of picking up their diabetic strips at local retail pharmacies.
(2) A rule that requires contract suppliers to provide at a minimum 50 percent of all of the different types of diabetic testing products on the market by brand and model name. This will apply to any bid program after Round 1, national or other, for these products. CMS is implementing this requirement that was in the 2008 MIPPA law. The OIG is conducting a study to generate volume data for various diabetic testing strip products furnished on a mail order basis. CMS says it will use this data in providing guidance to implement this special rule for mail order contract suppliers to ensure that their bids cover at least 50 percent of the volume of testing strip products currently furnished to beneficiaries via mail order. The OIG is required to complete their study before 2011 and will make their data available to the public; and
(3) A prohibition against influencing and incentivizing beneficiaries to switch their brand of monitor and testing supplies. The rule will prohibit suppliers awarded contracts for diabetic testing supplies from influencing or incentivizing the beneficiary in any way to switch the brand of glucose monitor and testing supplies they are currently using. CMS believes this requirement is essential if they are to enforce the "50 percent rule" above.
4. Continuing CMS Consideration of Grandfathering Rules in Competitive Bid Program for Oxygen and Capped Rental Items - In the proposed rule CMS asked for public comments on whether or not the current rules should be changed to reduce the number of payments the contract supplier would receive when a non-contract supplier choose not to be a grandfathered supplier for its capped rental or oxygen beneficiaries. Under current policy, a contract supplier receives a minimum of 10 months of rental payments for oxygen, and a minimum of 13 months for capped rental. CMS points out that since it established these rules in 2007, two significant changes have occurred. First, with respect to oxygen, the supplier retains ownership at month 36; in 2007 was that the beneficiary would assume ownership at month 36. Second, with respect to standard power wheelchairs, the Affordable Care Act mandates that after Round 1 standard power wheelchairs will be a capped rental item with no first month purchase option. Beneficiaries whose non-contract suppliers choose not to be grandfathered suppliers could be forced to pay an additional 13 months of copayments.
CMS states in this final rule that it will take into consideration comments it received on this issue in a future proposed rule.
5. New Appeals Process for Contracts Terminated under the Competitive Bid Program (42 CFR § 414.423) - CMS is finalizing its a new administrative appeals process for contracts terminated under the bid program largely as proposed with a few minor adjustments. CMS is establishing to a new appeals process for contracts terminated under the competitive bid program. The rule establishes policies and procedures relating to CMS' determinations of a breach of contract and the appeals process for contract suppliers that are considered to be in breach of contract. The rule includes a process for review and reconsideration before the contract is actually terminated. The appeals process is in addition to, and will not replace, existing CMS regulations regarding other appeals mechanisms.
6. Addition of Off-the-Shelf Orthotics to Bid Program Exemption if Furnished by Physician (42 CFR § 414.404) - Currently, certain items are exempt from the competitive bid program if they are furnished by a physician or other practitioner, if they are provided to their own patients as part of their professional service. The exemption had been limited to crutches, canes, walkers, folding manual wheelchairs, blood glucose monitors, and infusion pumps. In this rule, CMS expands the exemptions from the competitive bidding program to certain off-the-shelf orthotics when they their own patients as part of their professional service.
(The 2008 Medicare Improvements for Patients and Providers Act extended the same exemption to hospitals — therefore, crutches, canes, walkers, folding manual wheelchairs, blood glucose monitors, and infusion pumps, when furnished by hospitals to the hospital's own patients during an admission or on the date of discharge are not be subject to the competitive bid program.)
View more competitive bidding stories.